Lodamun

[imperialpearl]

FHIB expands into external investment opportunities to grow returns
With its eye on accruing as much benefit from the Lodamese people, the Federal Holdings and Investment Board, the state investment vehicle, expands its investment plans beyond domestic holdings and into international equities, backed by a 150 billion LOD pivot.

ⓘ: Chairman of the FHIB, Dr. Henry Quigly (right), fielding questions from the media during a recent notice on Defence Industry Equity Sales.

Although, for much of its inception and early development, its activities could be characterised as largely ‘mundane’ and indistinguishable from the beige bureaucracy that had come to define the Lodamese financial system, the monthly Chairman’s Briefing of the Federal Holdings and Investments Board (FHIB) received a sudden jolt of energy earlier this morning. Standing alongside Secretary of the Treasury Dr. Ario Peterson, FHIB Chairman Dr. Henry Quigly announced a dramatic overhaul of the Board’s investment strategy, marking a major departure from its previously cautious posture. Established as the federal government’s principal asset-holding and investment vehicle, the FHIB has, until now, operated within a narrow defined mandate centred on the stewardship of the state’s equity interests in so-called ‘National Champions’, companies deemed systematically important to the continued prosperity of the national economy. These champions typically included flagship companies in the energy, finance, transportation, defence and manufacturing; all sectors which have played a critical role in Lodamun’s economic development. As a direct result of this focus on ‘National Champions’, much of the FHIB’s work had been focused on the domestic market, as evidenced by its detailed spreadsheet of the state’s equity holdings in various companies, including Digital Instruments, Hemlock-Rogway, PCH Carville, among other entities which have become household names throughout the years. Owing to its otherwise tempered investment strategy throughout the years of its quiet existence, FHIB’s complete value had long remained a subject of limited public interest, known largely by officials connected to the financial community, but seemingly lost on the minds of the broader population. With the board seemingly gearing to transform how the entity functions, Secretary Peterson believed that it was time for a greater deal of transparency between the FHIB and the population. According to data released during the briefing, the FHIB’s consolidated portfolio was valued at around 150 billion LOD, a scale that places it slightly ahead of the various stately rainy day funds but behind some of the world’s more established sovereign wealth funds.

Following his detailed breakdown of the FHIB’s portfolio, where in he spoke to rationale behind the federal government’s equity stakes on most if not all major Lodamese firms, Dr Quigly announced that the board would manage its multi-billion dollar portfolio more aggressively and would dramatically move towards active capital deployment as opposed to its otherwise passive custodianship. Speaking to the revised strategy, Dr Quigly noted that the Board, with some intervention from the Treasury Department, was finally allowed to make materially larger equity positions in foreign firms, in sectors viewed to be beneficial to both the fund’s growth and Lodamun’s long-term economic development agenda. “It is becoming extremely clear that the Board can accrue greater benefits for the state by tapping into both the domestic and international equity markets,” Dr Quigly explained. Pointing to the otherwise positive performance of the global equity market, particularly amidst the broader stability currently being experienced within the international market, Dr Quigly stated that there was significant room for Lodamun to take advantage of the growth and development currently being experienced by numerous states. He noted that the creation of two streams from which much of the Board’s business would likely be low: Domestic Equity Management and External Equity Management. With both headed under self-explanatory names, Dr Quigly sought to pre-emptively clarify that it would not signal a shift in Lodamun’s traditional policy of investing in National Champions. Treasury Secretary Peterson noted that the Lodamese government would continue to seek out sizeable, non-voting stakes in major domestic firms within Lodamun. “The Lodamese Government has traditionally been of the view that we must secure the most benefit for the citizens of Lodamun. Our historic investments in these National Champions is but a demonstration of our continued commitment to that promise. I can assure you, it is something President Hartman believes we ought to continue going into the future,” Dr. Peterson explained.

Even as Dr Quigly announces the creation of the FHIB’s External Portfolio, some market analysts have noted that the board, even prior to the announcement, had gone onto a major, yet clandestine spree, buying up stocks in numerous companies throughout Terra. In Kalistan, the FHIB acquired a combined 16% stake in Kalistani industrial companies (12% in MoCo and 4% in Kalistan Military Industrial Company), under the rationale that the nation’s growing ambitions to adopt greater pieces of Kalistani-manufactured products would necessitate a seat at the table, even if it would not be allowed to exercise voting rights, per Kalistani law. In Mordusia, the FHIB acquired numerous stakes in Mordusian mining firms, as the nation’s nascent mining sector takes off following decades of stagnation. According to financial statements, the FHIB’s equities include a major 21% stake in Southern Resources, an 18% stake in MacKenzie Metal and a 7% stake in Trelodge Mining. Some financial analysts have noted that the state’s investment into mining firms stands in stark contrast to its commitments to the Green Compact, which, among its calls for Lodamun to reduce its reliance on imported energy, also makes it incumbent on the federal government to reign in behaviours which are otherwise harmful for the environment. In Luthori, the FHIB acquired stakes in various media companies, a sign perhaps of the nation’s gradual thaw in relations with the Artanian economic powerhouse. Previously, there had been a statutory ban on Lodamese firms (both public and private) from doing business with Luthorian firms, owing to the dramatic collapse in relations between the two states in the previous century. Some financial analysts like Henry Cline noted that the decision to acquire takes in companies such as Channel 7 (7%), NLB News (8%), the Financial Inquirer (4%), The Guardian (10%), Fort William Inquirer (9%) could signal to Lodamese firms that it was now safe for companies to begin their own ‘rediscovery’ of the Luthorian market. In Xsampa, the FHIB took advantage of the nation’s burgeoning economy and its broader ambitions of becoming the ‘progressive factory of the world’. As part of its clandestine equity buy-up spree, the board acquired stakes in numerous entities, ranging from agriculture to light-manufacturing: Semde Tech (12%), Nyima Rangjung (3%), Gyatso Chokpo (15%), Lhundrub Tsokpo (7%) and Tsangpo Mecha (11%) . “Of its various external equities, Xsampa to date has the most diversified offering. Perhaps a signal of greater intentions for a Lodamese pivot to Xsampa,” Cline opined. Documents also revealed that the board had secured a 15% stake in the Bianjie-based automotive company, Haseku. There is considerable speculation as to why the FHIB would invest in a foreign automotive company, given Lodamun’s more established automotive industry.

Dr Quigly noted that in seeking to exploit market benefits with the greatest returns, the FHIB was not interested in shareholder activism, noting that the board’s investment strategy was governed by the Lodamese Code of Ethics for Public Enterprises and Agencies, which bars Lodamese government-owned entities from acting against the interests of both Lodamun and the foreign country which hosts its operations. “We have always favoured a hands-off approach where possible and have always avoided directly influencing corporate decisions. We [the Board] are strictly against the sort of shareholder activism that has become commonplace. We are guided by the Green Compact and the Code of Ethics, and our decisions will reflect that in time. It is not our business to nudge companies around,” Dr Quigly explained. Some have noted that the FHIB’s foreign stakes in some entities nonetheless grant it a voice in many boardrooms of various companies; however, both Dr Quigly and Dr Peterson noted that the FHIB would not exercise voting rights in any decision made on the boards of the respective companies. “At the end of the day, the FHIB is just cashing in on the dividends from these stakes. Those dividends are held in trust, which builds the entity’s value but gives the Lodamese state an avenue from which it can finance various initiatives,” Henry Cline explained.